We signed an LOI at an attractive valuation, but the buyer's diligence team is dragging out the timeline and starting to nitpick minor operational issues. How do we keep momentum and prevent re-trading between LOI and close?

Question

Tyler Smith · Accepted Answer

Time is the natural enemy of every deal. Once an LOI is signed and you enter an exclusivity period of sixty to ninety days, leverage shifts almost entirely to the buyer. You are legally locked out of talking to other acquirers, your management team is distracted by diligence requests, and the buyer knows fatigue is setting in. If diligence drags on, small operational blips suddenly become excuses to re-trade the purchase price or demand wider escrows.

To keep momentum, you must run the transaction like a disciplined project rather than an open-ended conversation. Do not sign an LOI without a firm, pre-populated virtual data room. If you spend the first thirty days scrambling to find contracts and payroll summaries, you create the very vacuum buyers exploit.

Structure the exclusivity clause with clear, expiring milestones. Demand that phase-one financial diligence wrap up within thirty days, followed by draft definitive agreements by day forty-five. If the buyer misses key dates without a valid structural reason, reserve the right to terminate exclusivity immediately.

Keep running the business with intense discipline. When owners focus entirely on closing the sale, operational performance slips, leading to a weak trailing-twelve-month EBITDA right before closing. Delegate diligence management to a single deal point-person or your investment banker so the rest of your leadership team can keep their focus on weekly Scorecard measurables and quarterly Rocks in their Level 10 Meeting™.

When a buyer raises minor issues late in the process, use your Issues Solving Track (IDS®) with your advisory team to identify whether it is a legitimate operational risk or a classic re-trading tactic. If it is tactical noise, stand firm and remind them that your exclusivity window has an expiration date.